Omani crude oil: Nine Dollars in 48 hours
September 17, 2019 | 8:58 PM
by Times News Service

Muscat: Although the price of Omani crude oil has shot up by nearly $10 in two days, economists in the country say that the government will continue to push ahead with diversification to ensure that the country has a secure future, and help it withstand fluctuations in oil prices.

The price of Omani crude, according to the Dubai Mercantile Exchange, which sells it on the global markets, rose on 16 September from $59.25 to $64.56, reflecting a $5.31 increase in the price of Omani crude. It then rose to $68.44, an increase of $3.88 on 17 September.

Supplied photo

This increase of $9.19 in a span of just two days has pushed the price of Omani crude close to the $70 mark and has taken place in the wake of the reported drone attacks on Saudi Arabian company Saudi Aramco’s refineries in the city of Abqaiq and the village of Khurais.

Saudi Arabia’s Minister of Energy, Prince Abdul Aziz bin Salman bin Abdul Aziz, said that the attack had led to a temporary output reduction of 5.7 million barrels, or 50 percent of the company’s production.

In addition, a decrease of two billion cubic feet of gas per day has also been recorded in the wake of the attacks, following the minister’s inspection of the drone-hit areas, as reported by the Saudi Press Agency.

A statement released by the Ministry of Energy quoted the minister as saying that the attack was “an extension of the recent attacks on oil facilities and oil tankers. Production in the Abqaiq and Khurais plants was temporarily suspended. The explosions also halted production of associated gas by about two million cubic meters per day. The attack did not have any impact on the supply of electricity and water or on the supply of the local market of fuel.”

No workers were injured in the attacks.

A senior official at a leading oil and gas company in Oman told Times of Oman that because this increase in price was likely to be only temporary, the government would continue to proceed with its economic expansion plans.

“We reviewed this situation, and we realised that this is not going to be long-term,” he said.

“This is going to be a short-term phenomenon. The prices will be restored back to what they were a while ago, and there will be no long-term increase in the oil prices. There is no need to panic on the impact this will have on fuel prices. This impact will not last for a long time.

“The situation will get back to normal quickly,” added the official.

The senior official said, “This is the first time in a long time that we have seen this steep increase of 20 percent in just two days. The impact was immediate, and the oil prices went up by 20 percent the moment the market opened. Before this incident, it was about $59 per barrel, afterwards, it was close to $65, and now it has gone beyond that as well. This is purely short-term. This is the first time in recent history that we have experienced such a steep increase in such a short span of time.”

In addition, Ramanuj Venkatesh, a financial analyst in the country, highlighted several areas of diversification that would yield sustainable benefits in both the short and longer term.

He said, “Oman’s government will continue to expand and push ahead with diversification because that is the policy it has set upon, and those concerned are well aware of the benefits diversification will bring. There are two main areas of diversification here. The first is of course the industry, where Oman is looking to move towards clean energy such as solar energy, not just for oil extraction, but as a source of energy in the future as well. Given that Oman gets plenty of sunlight throughout the year, solar energy is a great move forward and will provide the Sultanate with a good source of clean energy that can be exported if needed.

“Oman is also focusing on training the younger generation of graduates and young professionals, because a majority of people in this country are young and eager to learn,” added Venkatesh. “With the government pushing ahead on Omanisation, quality employees are being targeted. A lot of the training, if you look at companies today, comes in the form of on-the-job training so that young employees will understand the concept of learning by doing.”

Diversification is a key part of the Tanfeedh plan launched by the Omani government with a view to reducing the country’s dependency on oil and gas. Five areas of expansion have been targeted: agriculture and fisheries, energy and mining, transport and logistics, tourism, and manufacturing.

Subscribe to our newsletter and be the first to know all the latest news